Techies need plan to deal with despots 2 Feb 2011 Vodafone suspended its Egyptian service after demands from the authorities. Google, on the other hand, chose to pull back in China. There are no easy answers on how to deal with autocratic regimes. But being transparent about the reasons for complying or exiting helps everybody.
Monte dei Paschi finally grasps capital nettle 2 Feb 2011 The Italian foundation that controls the world's oldest bank has hinted it will support a long overdue capital increase. Whether this is done through a merger or a rights issue, the group's shareholding is likely to be diluted. But it need not give up its influence entirely.
UK mustn’t learn wrong lesson from Pfizer closure 2 Feb 2011 After the U.S. drug giant decided to shut its UK R&D centre which developed Viagra, there'll be many calls for an aggressive industrial policy. But the right way to boost growth is through improved infrastructure, skills and investment while cutting taxes, not by picking winners.
Federal Reserve inaction gets it right this time 2 Feb 2011 The central bank opted not to press ahead with controversial mortgagerelated rule changes and instead punted the matter to a newly created consumer agency. Given the beating the Fed took for neglecting the issue during the boom years, it's a small victory for financial reform.
Vodafone strength is mixed blessing for new chair 2 Feb 2011 Gerard Kleisterlee, outgoing boss of Dutch conglomerate Philips, takes the chair as the telco's shares near highs last seen in 2007 and as concerns about its sprawling portfolio are being addressed. The question is how Kleisterlee can drive even more value for shareholders.
Nomura narrows gap with investment bank big league 2 Feb 2011 The Japanese financial giant performed strongly in equity capital markets in the last quarter of 2010, while new hires in trading proved their worth. Japan's fortunes may still set the pace, and the share price. But Nomura is slowly evolving into a global investment bank.
U.S. Congress may tie its own hands on spending 2 Feb 2011 If only U.S. Treasuries had covenants like corporate debt does. Instead of linking to EBITDA, metrics like borrowing or spending as a share of GDP could be used. That might be a stretch but lawmakers are still trying to implement new fiscal rules. It's a concept long overdue.
Middle East contagion raises geopolitical risks 1 Feb 2011 There is an upside scenario if the Arab world can transition to democracy. But with unrest closing in on Saudi Arabia and Israel maybe losing its few friends in the region, there is also danger. So long as it's uncertain how things will end up, global markets will be volatile.
Asia should prepare for life after cheap money 1 Feb 2011 Exportdriven economies have long benefited from and helped to create hot money inflows. But as the world rebalances, rates should rise, and finance is likely to get more expensive. Asia urgently needs capital markets that can finance development in an era of costlier funds.
Upbeat UPS can’t be counted on as a bellwether 1 Feb 2011 The U.S. package delivery giant historically has foretold broader economic prospects. So its expectation of recordhigh profit in 2011 should be encouraging. But three dynamics are weakening its role as a GDP fortune teller: online spending, efficiency and international growth.
Ocado’s rich share price leaves no room for error 1 Feb 2011 The online grocer's equity has risen 30 pct since IPO last July, buoyed by good results, improbable bid talk and a tech sector rally. With new investors showing interest, betting on price falls is rash. To grow into its rich valuation, however, Ocado still has a lot to deliver.
Egypt stocks will struggle regardless of outcome 1 Feb 2011 Whatever the political result, it is hard to see Egyptian shares bouncing back to levels seen before the protests. Simply to undo the damage, the country will have to prove it is a better place to invest than it was before. Turkey might be the most encouraging model.
Egyptian unrest alone does not justify $100 oil 1 Feb 2011 Fullscale chaos in the nation could rob the world of 3 million barrels a day. Yet Suez is not as important as it was in the 1950s, and global oil supplies are still ample. Only a broader crisis across the region would justify keeping crude prices this high for long.
Credit raters reap rewards of non-reform 1 Feb 2011 They've been branded essential cogs in the wheel of financial destruction. But raters are on the mend, as shown by S&P's 2010 results and Moody's forecasts. Resurgent markets help. But policymakers, especially the gnomes of Basel, have failed to dilute their influence.
New BP deserves the benefit of the doubt 1 Feb 2011 Even ignoring the jump in Gulf spill costs, Q4 numbers were a letdown. High oil prices won't prevent this being a bad year for the UK oil major. But BP's jam tomorrow story is convincing: the strategic revamp is right, and it has learnt to pay dividends without being profligate.
Vikram Pandit can’t rock’n’roll like Guy Hands 1 Feb 2011 The Citigroup boss just seized EMI from the buyout baron. Hands overpaid for the Iron MaidentoKaty Perry music business, larded on too much debt and soured artist relations. But he also tripled profit. Some financial wiggle room and a charm offensive might be all EMI needs.
BofA’s Montag plays virtuoso second fiddle 1 Feb 2011 The firm's investment banking chief landed a $15.2 mln bonus for his work in 2010. It's a bigger payday than his boss Brian Moynihan, his exboss Lloyd Blankfein, or the man who poached him from Goldman, John Thain. Sometimes it's better to be the prince than the king.
Treasury’s TARP basket cases on the mend 1 Feb 2011 Keeping Chrysler alive in 2009 was a controversial call. Meanwhile GMAC, rechristened Ally, sucked up $17 bln of taxpayers' cash. Now, the two stragglers are following AIG and GM on the road toward recovery. Ally might even be worth enough to offset U.S. losses on Chrysler.
As interest rates climb, gold could tank 1 Feb 2011 The yellow metal's price has tripled in the last five years as investors, wary of money printing, craved something solid. Now cash is coming out of one of the world's biggest gold funds. As global growth and inflation picks up and interest rates rise, gold could fall hard.
Deutsche Bank’s 2010 miss may prove a 2011 hit 1 Feb 2011 The German bank's Q4 earnings will be much lower than expected due to the cost of integrating acquisitions. However, strong revenue suggests trading was healthy. And pulling forward oneoff costs will make it easier to hit this year's 10 billion euro pretax profit target.